Target Canada Hopes to End 2013 on Cheery Note

Target Corp.’s Canadian unit is throwing some promotional tinsel at the holiday shopping season, as it seeks to forge a lasting bond with Canadian shoppers after an ambitious but uneven Canadian debut.

Target opened its first Canadian stores in March of this year. The last of the stores swung their doors open in November. Now that all 124 stores are open, the cheap-chic retailer can stretch its holiday-marketing efforts across the country without fear of alienating consumers still waiting for their local stores to open, said Target Canada spokeswoman Lisa Gibson.

It’s is increasing the number of pages in its store circular and beefing up its media advertising, and hoping a positive store experience during the busy holiday shopping season will keep Canadian consumers coming back.

Target’s first international expansion was a bumpy one. The initial Canadian stores disappointed some shoppers who took to social media to complain about barren store shelves and prices that were higher than those in the U.S.

A factor that didn’t help: many Canadian shoppers already knew its stores from shopping excursions to the U.S. and were willing to compare.

Keith Howlett, a retail analyst at Desjardins Securities, has this view: “Women who really knew Target–those who have lived in the U.S.–said the assortment wasn’t as good as it is in the U.S. Women who knew Target reasonably well–those who cross-border shop–said the prices were higher in Canada. And the women who don’t really know Target, they said, ‘Well, what’s the big deal?’ I think they were expecting a kind of Nordstrom at Wal-Mart prices because of all the enthusiasm.”

The retail moved to address the stocking issues and explained that its prices were benchmarked against its rivals in the Canadian marketplace–where higher real-estate, fuel and labor costs generally push prices higher than they are in the U.S. But the impression of slim variety and heavy prices persisted.

Target reported a 46% drop in profit in the latest quarter, with losses mounting from its expansion into Canada, where the retailer had to slash prices to clear out inventory. Earlier this year, Target warned that its Canada project would not be profitable by fourth quarter, as previously forecast.

Ms. Gibson declined to say when Target Canada is likely to become profitable.

Mr. Howlett says he’s observed a pickup in traffic at the stores he follows.

Target’s Ms. Gibson won’t comment on whether the holiday shopping period is likely to be transformative for Target Canada. But she said, “I think people are going to respond well to the store over the holiday season.”

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